What's happening
This bill restricts political contributions by LLCs and other corporate entities, requires disclosure of LLC ownership, and attributes their contributions to individual owners.
Why it matters
Closes loopholes that previously allowed LLCs and similar entities to skirt campaign contribution limits. by explicitly including them alongside corporations and joint-stock associations in restrictions, reducing the ability for businesses to exert outsized political influence.
Requires LLCs making political contributions to publicly disclose all direct and indirect owners and their ownership proportions. , increasing transparency and making it harder for individuals to hide political spending behind opaque corporate structures.
Attributes LLC political contributions to individual owners proportionally. , meaning that contributions count toward owners' personal contribution limits, preventing individuals from evading contribution caps through multiple LLCs.
Mandates the State Board of Elections to develop anti-evasion regulations. , signaling an intent to actively enforce and update rules to address new schemes designed to circumvent these restrictions.
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Who cares
Headline styles
Limit LLC Political Donations
Plain English, a few words. Used as the page title.
Sponsors
19 Co-sponsors
History
- Referred to elections
Companion bills
The same bill in the other chamber. A bill becomes law when one version passes both houses and the governor signs it, so either number can carry it.
Limit LLC Political Donations
Stricken · Sponsor Gustavo Rivera
Limit LLC Political Donations
In Senate Committee · Rules · Sponsor Brian Kavanagh
Full text
2 pagesUnderlined is new[Struck] is removedOfficial text on nysenate.gov ↗
STATE OF NEW YORK
496
2017-2018 Regular Sessions
IN SENATE (Prefiled)
January 4, 2017
Introduced by Sens. SQUADRON, ADDABBO, AVELLA, BRESLIN, COMRIE, DILAN, GIANARIS, HAMILTON, HOYLMAN, KAMINSKY, KRUEGER, LATIMER, MONTGOMERY, PARKER, PERALTA, PERKINS, PERSAUD, RIVERA, SERRANO, STAVISKY, STEWART-COUSINS -- read twice and ordered printed, and when printed to be committed to the Committee on Elections
AN ACT to amend the election law, in relation to political contributions
The People of the State of New York, represented in Senate and Assembly, do enact as follows:
Section 1. Section 14-116 of the election law, subdivision 1 as redesignated by chapter 9 of the laws of 1978 and subdivision 2 as amended by chapter 260 of the laws of 1981, is amended to read as follows:
§ 14-116. Political contributions by certain organizations. 1. No corporation [or], limited liability company, joint-stock association or other corporate entity doing business in this state, except a corporation or association organized or maintained for political purposes only, shall directly or indirectly pay or use or offer, consent or agree to pay or use any money or property for or in aid of any political party, committee or organization, or for, or in aid of, any corporation, limited liability company, joint-stock [or], other association, or other corporate entity organized or maintained for political purposes, or for, or in aid of, any candidate for political office or for nomination for such office, or for any political purpose whatever, or for the reimbursement or indemnification of any person for moneys or property so used. Any officer, director, stock-holder, member, owner, attorney or agent of any corporation [or], limited liability company, joint-stock association or other corporate entity which violates any of the provisions of this section, who participates in, aids, abets or advises or consents to any such violations, and any person who solicits or knowingly receives any money or property in violation of this section, shall be guilty of a misdemeanor.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[ ] is old law to be omitted.
LBD00443-01-7
S. 496 2
2. Notwithstanding the provisions of subdivision one of this section, any corporation or an organization financially supported in whole or in part, by such corporation, any limited liability company or other corporate entity may make expenditures, including contributions, not otherwise prohibited by law, for political purposes, in an amount not to exceed five thousand dollars in the aggregate in any calendar year; provided that no public utility shall use revenues received from the rendition of public service within the state for contributions for political purposes unless such cost is charged to the shareholders of such a public service corporation.
3. Each limited liability company that makes an expenditure for political purposes shall file with the state board of elections, by December thirty-first of the year in which the expenditure is made, on the form prescribed by the state board of elections, the identity of all direct and indirect owners of the membership interests in the limited liability company and the proportion of each direct or indirect member's ownership interest in the limited liability company.
§ 2. Section 14-120 of the election law is amended by adding a new subdivision 3 to read as follows:
3. (a) Notwithstanding any law to the contrary, all contributions made to a campaign or political committee by a limited liability company shall be attributed to each member of the limited liability company in proportion to the member's ownership interest in the limited liability company.
(b) If, by application of paragraph (a) of this subdivision, a campaign contribution is attributed to a limited liability company, the contributions shall be further attributed to each member of the limited liability company in proportion to the member's ownership interest in the limited liability company.
(c) The state board of elections shall enact regulations that prevent the avoidance of the rules set forth in paragraphs (a) and (b) of this subdivision.
§ 3. This act shall take effect immediately.
Reflowed for reading: line numbers and page breaks removed. Cite the official text.
Sponsor's memo
Title of bill
An act to amend the election law, in relation to political contributions
Summary of specific provisions
Section 1 of the bill adds LLCs to Election Law § 14-116 to provide that LLCs are subject to the aggregate contribution limit of $5000 that applies to corporations. Section 1 also requires disclosure of the identity of all direct and indirect owners of the membership interests in the LLC and the proportion of each direct and indirect member's ownership interest in the LLC.
Section 2 amends § 14-120 of the Election Law by requiring all contributions made to a campaign or political committee by a LLC be attributed to each member of the LLC in proportion to the member's ownership interest. In addition, the State Board of Elections shall enact regulations that prevent the avoidance of the established rules.
Section 3 of the bill establishes the effective date.
Justification
Current law, as interpreted by the State Board of Elections (SBOE), allows a single individual to make multiple contributions to the same candidate or committee through separate LLCs. Often it is difficult to know who is ultimately directing the contributions.
The election law does not explicitly address contributions by LLCs. Instead, pursuant to a 1996 SBOE decision, each LLC is treated as a separate contributor even if many of them are controlled by the same person. As a result, LLC contributions are governed in a way that is inconsistent with all other types of campaign contributions. The contribution limits that apply to corporations do not apply; the assignment of contributions to members required of partnerships does not exist; and the transparency and protection against an individual contributing above the legal limits is absent.
In April, 2015, in the face of public outcry and despite the support of two of the four SBOE members, the board declined to revisit its 1996 decision, leaving it up to the legislature to act. Thereafter, the Daily News reported that the LLC loophole was used to contribute $25 million to state politicians over the past decade and that LLCs linked to one individual have used it to contribute $13.2 million since 2000 (Bill Hammond, NY Daily News, April 28, 2015, www.nydailynews.com/opinion/bill-hammond-bending-cash-article 1.2202628).
Contrary to the current approach, the Federal Election Commission treats LLCs as corporations or partnerships rather than individuals for campaign finance purposes. This bill would apply to LLCs the provisions that already apply to corporations under New York law. It would also increase transparency by requiring disclosure of the identity of individuals with membership interests in LLCs. Finally it would ensure that the loophole is fully closed by attributing LLC contributions to each LLC member in a manner similar to that provided for under current law for partnerships.
These changes would clarify the election law with respect to LLCs, provide uniformity, and close an egregious loophole that has allowed certain individuals to evade limits that other contributors adhere to.
Prior legislative history
2016: S6OB/A6975C - REPORTED FROM ELECTIONS AND COMMITTED TO CODES/ passed assembly 2015: S60/A6975 - REPORTED FROM ELECTIONS AND COMMITTED TO CORPORATIONS/passed assembly 2013-2014: S166/A5067- REFERRED TO ELECTIONS/Advanced to Third Reading (Assembly) 2011-2012: S30/A2493- REFERRED TO ELECTIONS 2010: S8395/A11355- REFERRED TO RULES
Effective date
This act shall take effect immediately.
Summaries, headlines and scores are AI-generated from the official bill text. How we score bills. Source: NYS Open Legislation.